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Wednesday, 19 January 2011

American companies see hopes for future in China

The American Chamber of Commerce in Shanghai said US companies have achieved great success in the past year in China, and are optimistic about the two nations' closer ties and win-win prospects.

The report was released on Wednesday as President Hu Jintao is paying a state visit to the United States.

The Chamber said despite challenging market conditions and an increasingly competitive business environment, 87 percent of the 346 US companies in China reported revenue growth, surging from 47 percent in 2009 and 77 percent in 2008.

Seventy-nine percent of them said they are in the black, up from 65 percent in 2009 and 70 percent in 2008.

The report, entitled China Business Report 2010-2011, showed 61 percent of the US companies increased their market share in China, up from 40 percent in 2009 and 52 percent in 2008.

Brenda Foster, president of the Chamber, said there are clear challenges to doing business in China, but reiterated a statement last week from US Treasury Secretary Timothy Geithner that "the economic strings of US and China are in many ways complementary".

"And although China faces a complicated set of challenges, it is very much in the interests of not only the American business community, but in the interests of the United States to well manage China's business event," Foster said.

"The result of this year's survey shows that the financial performance of American companies in China improved in 2010, following what had been an uneven growth between 2008 and 2009. Not only have US companies recovered, they are reporting all-time performance highs and remain optimistic about their business prospects," said Foster.

Although showing impressive financial results, US companies report that China remains a challenging business environment for a host of reasons. Finding enough qualified staff is the No 1 business challenge, and competition is picking up not only between US and other foreign companies but between US and Chinese companies - both private and State-owned enterprises.

"This year's survey results indicate that US companies in China have come to expect challenges in the China market and have weighed them against the opportunities and have found a way to succeed despite them," said Foster. "Nonetheless, it is essential that the US continues to aggressively engage China to address key business challenges that hinder market access and impact future investment."

New additions to this year's report are the Chamber's China Business Climate Indices, which measure business performance across the three broad measures of success, confidence and the welcoming environment for US companies in China.

Businesses in China's quickly growing retail sector top the success index, auto companies ranked as the most confident about their future opportunities, and chemicals and electronics companies are among the industries that feel the most welcome.

"US companies in China are performing at a high level and will continue to do so," said Michael Klibaner, national director and research head at Jones Lang LaSalle China, a leading global property service firm. "But what we show in this year's report is that just as there is no one 'China market', the challenges and opportunities for US companies vary by market sector and by industry."

Optimism regarding the China market continued in 2010. About nine out of 10 US companies in China forecast a revenue increase for 2011. China is the No 1 priority for 20 percent of US companies, and the percentage of companies expecting to increase investment in China by more than 15 percent more than doubled in 2010.

"There has always been a great deal of optimism about the China market, mostly based on the hope of future opportunity," said Steven Ganster, managing director of Technomic Asia, a market strategy consulting firm based in Shanghai.

"But now we're seeing a more mature or seasoned optimism, grounded in the reality that succeeding in China is critical to the future of the company no matter the challenges it presents," he said.

This year's survey was conducted online from mid-November to early December. A total of 346 companies participated, yielding a response rate of 25 percent.

The American Chamber of Commerce in Shanghai is the largest and fastest growing American Chamber in the Asia-Pacific region.